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Consortium offers premium on Avusa shares

Johannesburg - The Capitau consortium, which has announced an expression of interest (EoI) to acquire Avusa [JSE:AVU], is looking to offer R26 per share for the media giant.

This represents a 30% premium to the spot price on the last trading day prior to the date of the EoI, and a 19.7% premium to the 30-day volume weighted average price calculated from the last trading day prior to the EoI.

The consortium, led by Capitau Holdings Limited and comprising Capitau and RMB Ventures, one of the private equity businesses within the FirstRand group, said the EoI contemplates that the proposed acquisition, if and when it proceeds, will be executed by a new company (Newco) to be formed by the consortium.

The EoI sets out an indicative price of R26.00 per ordinary share, based on the consortium's current assessment of future prospects for Avusa. This is to be settled, at the election of the Avusa shareholders, either:

 -  in cash of R26.00 per share ("cash consideration"); or

 - by way of a "reinvestment alternative" consisting of a combination of cash of R18.00 per share; and cumulative redeemable preference shares in the share capital of Newco with a subscription price of R5.00 for every share held in Avusa; and  ordinary shares in the share capital of Newco with a subscription price of R3.00 for every share held in Avusa in such proportions as will, upon election by the holder of the reinvestment alternative in respect of its shares in Avusa, result in the reinvesting Avusa shareholders being entitled to their pro rata percentage of the ordinary and preference issued share capital of Newco.

"Subject to such amendments as may be prudent, or advisable, it is intended that on successful implementation of the proposed acquisition all of the ordinary shares in Avusa shall be held by Newco; and Newco shall be held as to no more than 70% of its ordinary issued share capital by the current Avusa shareholders, and as to the balance thereof, by the consortium.

"This will constitute Avusa as a wholly owned subsidiary of Newco and necessitate its delisting from the JSE Limited," the consortium said.
 
Outlining its rationale for the proposed transaction, the consortium said it was impressed by the operations and strategy of the Avusa group and it was its intention to work together with management to grow the business along similar lines over the medium to long term.

"The members of the consortium have well established track records of successfully implementing industry mergers and acquisitions and would look to apply such experience to add value in order to grow the business," the consortium said.

It said: "The consortium is an investment consortium which is serious about pursuing the proposed acquisition. Both Avusa and the consortium share a common view that it is essential to maintain the editorial independence of the Avusa group's relevant media assets.

"While discussions are at a preliminary stage, the consortium is continuing to engage with the independent sub-committee established by the Avusa board (the 'committee') with a view to implementing the proposed acquisition."

The consortium said it had approached and received irrevocable undertakings in support of the proposed acquisition from holders of 59% of the Avusa shares.

"Furthermore, of the 59% mentioned above, holders of 38% of the Avusa shares have undertaken to vote against any scheme proposed by, and not to agree to the sale of their shares to, any party other than the consortium," it said.

It pointed out out that Mvelaphanda Group Limited (Mvela Group) was not a member of the consortium as had been speculated in the press, but one of the Avusa shareholders who had signed an irrevocable undertaking in support of the proposed acquisition.

"Furthermore, Mvela Group has committed to elect the reinvestment alternative described above, which will be available to all Avusa shareholders," it said.


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